Small businesses are crucial to sustaining a healthy economy as they employ almost half of all Australians currently in the workforce. The covid-19 pandemic has caused huge disruption to the way small businesses operate. After being forced to close overnight in March 2020 and then re-open to limited capacity two months later restaurants, gyms and clothing stores have all had to change the way they do business to ensure that they remain financially viable whilst abiding by the governments social distancing rules.  

To remain fresh in the minds of their customers small businesses were forced to put more time and effort into their social media marketing strategy to help boost online sales. Due to the closure of their physical stores clothing retailers had to upgrade their online stores to continue selling their products. The types of stock clothing stores were selling online also had to evolve. Instead of predominately offering clothes that customers would purchase to wear on a night out at the clubs, retail stores began to move towards a shift in selling outfits that customers would feel comfortable with wearing around the house during the lockdown. This example highlights the significance that a business must be prepared to adapt to sudden change in the age of covid-19. Adaption is the key to any small business that is aspiring to remain successful during one of the most unpredictable periods of human history.  

Craig Dangar says that “during the covid-19 pandemic we are noticing that a lot of businesses have been relying upon the Government support for profitability, once this is stripped away a lot of businesses are in financial difficulties and this is not necessarily going to improve. Things have changed, businesses may not have adapted and there may not be an improvement on the horizon” says Craig Dangar.

As a way of responding to the lockdown in March many gyms across Australia decided to introduce online fitness programs for their clients. These programs were originally only made available for existing members of the gym. However, over time many gyms expanded their reach by enabling these programs to also be accessed by individuals who hadn’t registered a membership with their gym. This innovative decision helped grow the gyms online presence thus giving their business exposure to a larger community. This resulted in more people purchasing a gym membership when covid restrictions were eased and gyms were able to re-open in real life. Even after gyms were physically re-opened online classes continued to be popular as gyms across the country had to abide by the 1 person per 4 square metre rule that was followed by cafes and other indoor venues across Australia.   

“Businesses that are thriving are those that have rationalised their cost bases and ensured that their businesses are scalable. For businesses at risk, this has meant adopting the majority of the covid enforced changes and taking advantage of these to improve their bottom line” says Mr. Dangar.

For a period of time cafes and restaurants were only allowed to serve take-away products. Since customers weren’t allowed to dine in for a meal, hospitality venues had to re-access how they distributed their food to customers. Many cafes began to sell everyday products such as; milk and bread for a price similar to the supermarkets. This was a very intelligent business decision to make due to the difficulty many Australians faced with purchasing essential items in supermarkets as a result of many customers panic-buying. Many restaurants sold un-cooked pasta and un-cooked meats for customers to take home and cook due to a shortage of pasta and meat being available in supermarkets.  

One of the biggest difficulties Australian businesses had upon re-opening was the fact that re-opening a business costs money. Having to spend money to buy new stock and pay money to put on staff to serve customers placed a financial strain on many Australian businesses. It was also difficult since plenty of stock that was purchased in the weeks leading up to the covid-19 enforced lockdown went to waste. Money spent to purchase litres of beer kegs went to waste and many foods also passed their used by dates before getting an opportunity to be sold to a customer.   

“Hospitality, accommodation and retail are some of the hardest hit and for some of these businesses there is nothing that will bring them back to health, for businesses that continue to struggle it is a case of rationalising costs, identifying opportunities for expansion or new revenues and ensuring that there is a viability long term. We would argue that businesses in these sectors need a page one analysis of what the future looks like and what can be done to ensure success or alternatively what steps should be taken to protect their positions” says Craig Dangar.

The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme  

Craig Dangar believes that “Government policy in Australia has been some of the most robust in the world, continuing this policy of business support is reaching its conclusion but each of the measure from JobKeeper, JobMaker and direct grants has been significant” says Craig Dangar.

To help assist businesses with re-opening, the Australian government introduced “The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme”. This scheme supports up to $40 billion of lending to SMEs by guaranteeing 50 per cent of new loans issued by participating lenders to SMEs.   

The Guarantee Scheme enhances lenders ability to provide cheaper credit, thus giving many otherwise viable SMEs access to vital additional funding in order to help their business make a successful recovery from the impact of covid-19 restrictions and have more financial support to invest for the future.  

The scheme began on 23rd Mach 2020 and the second phase of the scheme commenced on 1st October 2020 and will be available for loans made by eligible lenders until 30th June 2021. The scheme aims to support Small to Medium Businesses, this also includes sole traders and non-for profits. Borrowers can access up to $1 million and loans can last for anywhere of up to 5 years. A holiday repayment is not required but can be offered at the discretion of the lender.   

The interest rate on loans will be determined by lenders, but will be capped at around 10 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.  

Loans under the new scheme can be used for a large number of business purposes but they cannot be used for the following reasons; to purchase a residential property, to purchase financial products, to lend to an associated entity or to lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.  

The Guarantee Scheme is open to applications from all active Australian businesses with a turnover of less than $50 million in the previous financial year, or businesses that are expected to have a turnover of under $50 million in the current financial year. Both self?employed individuals and non-profit businesses are eligible.  

“Covid has forced businesses to reconsider, to adapt and to change, those that have moved quickly are doing well, those that are still adapting are likely to struggle, for many now is the time to make the hard decisions into the future” says Craig Dangar.